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BoE chief economist reveals concerns over asset price rises

Spencer Dale, the Bank of England's principal economist, revealed he voted at last month’s Monetary Policy Committee meeting to contain the extension in quantitative easing to £175bn (€190.7bn) since he was worried that a larger allocation could drive asset prices up too high.

Significant infusions of liquidity through the use of “asset purchases as a policy instrument" might lead to “unwarranted” rises in some asset prices that could prove “costly to rectify", Dale said.

Meanwhile, Mervyn King, the Bank’s Governor, has seemingly backed a weak sterling, saying the significant fall in the value of the currency in recent months “will be helpful” in rebalancing the UK economy by bolstering exports.

Speaking to The Journal, the Newcastle newspaper, King also cautioned against getting “too carried away” by the recent stabilisation in output and some signs of a pick-up in growth.

Separately, the European Central Bank on Thursday predicted an “uneven” economic recovery in the eurozone, highlighting the “temporary nature of some of the supporting factors and the ongoing balance sheet correction in the financial and non-financial sectors of the economy".

The ECB’s outlook came as the Ifo economic research institute’s index of German business sentiment registered its sixth successive monthly rise, increasing from 90.5 in August to 91.3 this month.